Strategic change in procurement orientation in the South African automotive industry : a case study

Abstract

The South African automotive industry faces increasing challenges for Original Equipment Manufacturers (OEMs) and their suppliers to produce high-quality products at low costs. Items purchased by OEMs from the supply chain typically account for more than seventy percent of the total costs of manufactured automobiles. The strategic significance of the purchasing function is subsequently recognised as a major determinant of competitiveness. From a review of literature, a conceptual model is introduced whereby localisation strategies of OEMs, with respect to their main suppliers, can be optimised for competitive advantage. The findings of a case study of a South African OEM’s localisation strategies are presented. Based on the findings, an improved model is proposed that could be used as a guideline to orientate procurement strategies for optimal performance, so as to guarantee the competitive advantage of local OEMs. It is anticipated that these results will provide a platform of effective strategy development for the South African OEMs.

Verskeie uitdagings, met die klem op vervaardiging van hoë-kwaliteit produkte teen verlaagde koste, word in die gesig gestaar deur beide die Oorspronklike Toerusting Vervaardigers (OTVs) en hulle verskaffers in die Suid-Afrikaanse motorindustrie. Items wat OTVs van hul verskaffers verkry verteenwoordig tipies meer as sewentig persent van die totale vervaardigingskoste van motors. Die strategiese implikasie van die aankopingsfunksie word dus erken as belangrike aanwysing van ‘n goeie kompeterende basis. ‘n Konseptuele model word neergelê gebaseer op ‘n oorsig van die literatuur, waardeur die lokaliseringsstrategieë van OTVs, in terme van hulle verskaffers, geoptimiseer kan word as kompeterende voordele. Die bevindinge van ‘n Suid-Afrikaanse OTV, as gevallestudie, se lokaliseringsstrategieë word verder voorgelê. Deur hierdie bevindinge word ‘n verbeterde model voorgestel wat moontlik gebruik kan word as 'n gids om the aankoopstrategieë te oriënteer ten einde kompeterende voordele te verseker vir plaaslike OTVs. Dit word voorspel dat die resultate van hierdie studie ‘n platform daar kan stel vir die effektiewe strategiese ontwikkeling van die Suid-Afrikaanse OTVs.